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Bear Scotland Ltd –v-Fulton (and others conjoined) – Holiday Pay


Those of you who follow our Facebook and Twitter pages may have seen our update in respect of this landmark case which was decided by the Employment Appeals Tribunals in November.

The primary finding affecting workers and employers being that overtime should be taken into account when calculating a worker’s holiday pay.

There has been much debate on the specific interpretation of the wording used in the Judgment and what action Employers should take in response.

What was found in this case:-

  • Normal remuneration i.e. pay which is normally received, should be paid during periods of holiday leave. What constitutes “normal” pay is pay that has been paid over a sufficient period of time which for example would include guaranteed overtime
  • There should be an intrinsic or direct link between the payment claimed and the work a worker is required to carry out. Taking this into account non-guaranteed overtime would be held to be directly linked to the work a worker is required to carry out and thus should be paid during annual leave
Voluntary overtime is less clear but where a worker can show that he/she has received a certain amount of pay over a sufficient period of time it is likely this will be deemed as “normal” pay and should be paid during period of annual leave.

Where regular commission is earned this too should form part of “normal” pay for the purposes of calculating holiday pay.

Any backdated claims are limited to those where there has been a break of three months or more from the last non-payment and we confirm that The Deduction from Wages (Limitation) Regulations 2014 has now come into force which imposes a 2 year backstop period on most unlawful deduction from wages claims, including claims for holiday pay. The new backstop period will apply to claims lodged on or after the 1st July 2015.

It should also be noted that Regulation 16 of the Working Time Regulations 1998 does not provide a contractual right to paid leave and therefore workers will not be able to bring breach of contact claims for unpaid statutory entitlement in the civil courts.

Please also note that where a Claimant lodges a holiday pay claim and they suffer further loss in connection with holiday pay, they need only amend their original claim (so long as it is still live). A Claimant will not need to issue a new claim and pay an additional claim issue fee.
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